During development, the lung mesenchyme gives rise to non-epithelial structures, while in the mature lung the mesenchyme responds to perturbations to maintain homeostasis. The function, or malfunction, of mesenchymal cells (e.g., fibroblasts, myofibroblasts and smooth muscle cells) is intimately involved with numerous lung diseases, including emphysema, asthma, fibrosis, pulmonary hypertension, cancer and bronchopulmonary dysplasia. There are significant gaps in our knowledge of how resident mesenchymal cells function over time in the lung. Major challenges include the need for additional markers that delineate functionally distinct subtypes of mesenchymal cells, the precise identification of mesenchymal cells that function as resident progenitor or stem cells, and the identification of new signaling pathways or other molecules in mesenchymal cells that can be therapeutically targeted. The broad goal of our work is to identify novel markers of fibroblast subsets, in particular stem/progenitor cells that might be used to identify and therapeutically target these cells in disease states. Sonic hedgehog (Shh) is a signaling molecule involved in mesenchyme proliferation and differentiation during lung development. In lung, Shh is produced by epithelium and induces critical responses in mesenchyme required for branching morphogenesis. While Shh production largely ceases by birth, we find there remains a population of mesenchymal cells in adult lung responding to Shh or a similar Hedgehog (Hh) ligand. These cells are identifiable in Gli1-lacZ reporter mice (the Gli1 gene is both a component of the Hh signaling pathway and a transcriptional target of Hh signaling). The Hh-responding cells have a distinctive location in the adventitia of airways and pulmonary vessels, and in the visceral pleura. By colocalization studies we find that the cells are largely col1+SMA- fibroblasts. Based on our data and recent results on mesenchymal stem/progenitor cells from other groups, we hypothesize that the Gli1-lacZ+ cells are an important population of mesenchymal cells with progenitor/stem cell capability. To test this hypothesis we propose two broad aims: (1) to genetically fate-map the Hh-responding cells under various conditions to determine their ability to expand and contribute to different cell lineages in the lung, and (2) to develop techniques to isolate and culture these cells, and characterize their behavior in vitro. The project will be accomplished by careful analysis of various Hh-reporter mouse strains and cells derived from these mice, and should have broad implications for lung biology and disease.